UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from ___________________
to ___________________
Commission File Number 1-4801
BARNES GROUP INC.
(a Delaware Corporation)
I.R.S. Employer Identification No. 06-0247840
123 Main Street, Bristol, Connecticut 06010
Telephone Number (203) 583-7070
Number of common shares outstanding at
November 10, 1995 - 6,590,822
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
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BARNES GROUP INC.
FORM 10-Q INDEX
For Quarterly period ended September 30, 1995
<CAPTION>
DESCRIPTION PAGES
----------- -----
<S> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements
of Income for the nine months and third
quarter ended September 30, 1995 and 1994 3
Consolidated Balance Sheets as
of September 30, 1995 and December 31, 1994 4-5
Consolidated Statements of Cash Flows
for the nine months ended September 30,
1995 and 1994 6
Notes to Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Net sales $141,679 $140,261 $451,290 $425,520
Cost of sales 91,856 89,688 288,974 272,160
Selling and admin-
istrative expenses 38,694 40,401 123,230 124,766
-------- -------- -------- --------
130,550 130,089 412,204 396,926
-------- -------- -------- --------
Operating income 11,129 10,172 39,086 28,594
Other income 992 1,056 3,344 3,319
Interest expense 1,367 1,320 4,259 3,996
Other expenses 422 865 1,952 1,989
-------- -------- -------- --------
Income before income
taxes 10,332 9,043 36,219 25,928
Income taxes 4,071 3,671 14,270 10,138
-------- -------- -------- --------
Net income $ 6,261 $ 5,372 $ 21,949 $ 15,790
======== ======== ======== ========
Per common share:
Net income $ .95 $ .84 $ 3.36 $ 2.49
Dividends .40 .35 1.20 1.05
Average common shares
outstanding 6,581,479 6,371,543 6,532,708 6,331,867
<FN>
See accompanying notes.
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BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS September 30, December 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 16,665 $ 22,023
Accounts receivable, less allowances
(1995-$3,127; 1994-$3,222) 94,571 86,877
Inventories
Finished goods 28,857 28,769
Work-in-process 15,508 13,697
Raw materials and supplies 10,809 8,379
-------- --------
55,174 50,845
Deferred income taxes and prepaid
expenses 14,928 15,792
-------- --------
Total current assets 181,338 175,537
Deferred income taxes 22,288 23,854
Property, plant and equipment 293,106 276,185
Less accumulated depreciation 172,327 163,616
-------- --------
120,779 112,569
Goodwill 20,174 20,614
Other assets 19,433 19,382
-------- --------
Total assets $364,012 $351,956
======== ========
<FN>
See accompanying notes.
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' September 30, December 31,
EQUITY 1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Notes payable $ 980 $ 7,903
Accounts payable 31,653 31,424
Accrued liabilities 43,414 45,713
Guaranteed ESOP obligation-current 2,303 2,172
-------- --------
Total current liabilities 78,350 87,212
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 8,095 9,839
Accrued retirement benefits 68,433 66,817
Other liabilities 10,273 10,949
Stockholders' equity
Common stock-par value $1.00 per share
Authorized: 20,000,000 shares
Issued: 7,345,923 shares stated at 15,737 15,737
Additional paid-in capital 27,408 27,772
Retained earnings 133,157 118,938
Foreign currency translation
adjustments (8,682) (8,715)
Treasury stock at cost,
1995-755,539 shares
1994-916,748 shares (28,361) (34,582)
-------- --------
139,259 119,150
Guaranteed ESOP obligation (10,398) (12,011)
-------- --------
Total stockholders' equity 128,861 107,139
-------- --------
Total liabilities and stockholders'
equity $364,012 $351,956
======== ========
<FN>
See accompanying notes.
</TABLE>
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended September 30, 1995 and 1994
(Dollars in thousands)
(Unaudited)
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Operating Activities
Net income $21,949 $15,790
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 20,483 18,456
Gain on sale of property, plant and
equipment (297) (176)
Translation losses 243 490
Changes in assets and liabilities:
Accounts receivable (7,613) (15,247)
Inventories (3,962) (3,028)
Accounts payable 333 4,870
Accrued liabilities (1,736) 3,825
Deferred income taxes 3,121 81
Other liabilities and assets (185) (921)
------- -------
Net Cash Provided by Operating Activities 32,336 24,140
Investing Activities
Proceeds from sale of property, plant
and equipment 1,079 2,647
Capital expenditures (27,461) (21,913)
Other (1,368) (1,754)
------- -------
Net Cash Used by Investing Activities (27,750) (21,020)
Financing Activities
Net decrease in notes payable (6,923) (3,548)
Proceeds from the issuance of common stock 5,659 3,058
Dividends paid (7,854) (6,654)
------- -------
Net Cash Used by Financing Activities (9,118) (7,144)
Effect of exchange rate changes on
cash flows (826) (1,087)
------- -------
Decrease in cash and cash equivalents (5,358) (5,111)
Cash and cash equivalents at beginning
of period 22,023 24,129
------- -------
Cash and cash equivalents at end of period $16,665 $19,018
======= =======
<FN>
See accompanying notes.
</TABLE>
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<PAGE>
Notes to Consolidated Financial Statements:
1. Summary of Significant Accounting Policies
------------------------------------------
The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. They do not include all
information and footnotes required by generally accepted
accounting principles for complete financial statements.
For additional information, please refer to the
consolidated financial statements and footnotes included in
the company's Annual Report on Form 10-K for the year ended
December 31, 1994. In the opinion of management, all
adjustments, including normal recurring accruals considered
necessary for a fair presentation, have been included.
Operating results for the nine-month period ended September
30, 1995, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995.
2. Contingency
-----------
In December, 1991, the company was notified by the
McDonnell Douglas Corporation that McDonnell Douglas was
terminating for default an $8.2 million contract with the
company's Advanced Fabrication unit. In 1992, the company
wrote off $4.0 million of net assets related to this
contract that were previously included in its financial
statements. The company believed from the onset that it
had legitimate defenses to the default claim. In June,
1995, this dispute was settled to the satisfaction of both
parties with no further financial impact on the results of
operations or on the financial position of the company.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Sales
-----
The company's 1995 nine months' sales were $451.3 million, up 6%
from $425.5 million in 1994 as all three operating groups
reported sales gains. Third quarter 1995 sales were up 1% to
$141.7 million from the 1994 level of $140.3 million on the
strength of sales increases at Barnes Aerospace offset in large
part by sales declines at Bowman and Associated Spring. Both the
nine month and third quarter sales levels for 1995 set new
company records for their respective period.
Associated Spring's 1995 first nine months' sales increased 4% to
$213.5 million from $205.6 million in 1994. Third quarter sales
were $66.2 million, down 3% from a year ago. The North American
manufacturing business was affected by a softening of the U.S.
durable goods market and continuing labor problems at the
Bristol, Connecticut plant. Work slowdowns since March have
resulted in decreased shipments as there has been little progress
towards completing a new labor contract. Overseas the group's
manufacturing operation in Singapore reported strong nine month
and third quarter 1995 sales increases over 1994. The Raymond
Distribution division reported a 1995 year-to-date improvement
and a third quarter 1995 decline from the comparable 1994
periods.
Bowman Distribution's sales were up 3% for the first nine months
of 1995 to $167.2 million from 1994's level of $162.7 million.
Third quarter 1995 sales declined 6% to $50.7 million from $53.7
million in 1994. All business units reported sales improvement
for the first nine months of 1995. Bowman U.S., the group's
largest business unit, reported a sales decline in the third
quarter of 1995 when compared with 1994's third quarter. The
sales decline resulted in part from lower manpower in the field
sales organization.
Barnes Aerospace's 1995 first nine months' sales increased 23% to
$71.2 million from 1994's sales of $57.7 million. Third quarter
1995 sales of $25.0 million increased 35% over 1994's third
quarter sales of $18.4 million. All business units reported
period-over-period sales gains with the exception of the repair
and overhaul business whose 1995 third quarter sales did not keep
pace with the third quarter of 1994.
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<PAGE>
Operating Income
----------------
Operating income in 1995 improved substantially over strong 1994
results. Consolidated operating income for the first nine months
of 1995 was up 37% to $39.1 million from the $28.6 million
reported in 1994. Third quarter 1995 operating income of $11.1
million was 9% higher than the $10.2 million reported in 1994's
third quarter.
Associated Spring's operating income in the first nine months of
1995 nearly kept pace with its sales growth as a small
improvement in the gross margin percentage was offset by an
increase in selling and administrative expenses as a percentage
of sales. The third quarter 1995 operating income declined
sharply due in part to the decrease in sales volume and an
increase in selling and administrative expenses as a percentage
of sales. This was caused in part by excess costs at its
Bristol, Connecticut plant and operating inefficiencies at its
Dallas, Texas plant related to the transfer of equipment and
product from a former west coast facility.
Bowman Distribution's 1995 first nine months' and third quarter
operating income improved substantially over 1994 due to higher
year-to-date sales volume and significantly lower operating costs
expressed in both absolute terms and as a percentage of sales.
Barnes Aerospace's operating results improved significantly for
both the first nine months and third quarter of 1995 over the
comparable 1994 periods. The 1995 increase in sales volume and
decrease in operating costs expressed as a percentage of sales
resulted in the group reporting operating income for the third
consecutive quarter.
Non-operating Income/Expense
----------------------------
Interest expense in the first nine months of 1995 was higher than
in 1994 because of higher interest rates offset in part by lower
debt levels.
Other expenses decreased in the third quarter of 1995 from 1994's
third quarter primarily due to lower foreign exchange losses.
Financial Condition
-------------------
Cash Flows
----------
For the first nine months of 1995, net cash flows provided by
operating activities were $32.3 million, an increase of $8.2
million over 1994. The sharp increase in operating cash flow is
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<PAGE>
directly attributable to the increased level of earnings after
adjustment for the noncash charge for depreciation and
amortization.
Net cash used by investing activities for the first nine months
of 1995 was $27.8 million compared to $21.0 million in 1994.
Expenditures for property, plant and equipment were up $5.5
million over 1994's expenditures, an increase of 25%. All three
operating groups continued to invest in new equipment to improve
productivity, quality and customer service.
In 1995, net cash used by financing activities was $9.1 million
compared to $7.1 million in 1994. This year-over-year increase
was primarily due to the $6.9 million pay down of debt in 1995
versus $3.5 million in 1994. In addition, proceeds from the
issuance of common stock increased to $5.7 million in 1995 from
$3.1 million in 1994, a result of an increase in the exercise of
stock options. The 1995 increase in dividends paid over the 1994
amount was due to both an increase in the dividend per share and
number of shares outstanding.
Liquidity and Capital Resources
-------------------------------
The company's liquidity, measured in terms of working capital,
was $103.0 million at September 30, 1995, an increase of $14.7
million from the December 31, 1994, level. The current ratio was
a very strong 2.3 at September 30, 1995, compared with 2.0 at
December 31, 1994.
The ratio of interest-bearing debt to total capitalization
approximated 25% at September 30, 1995, compared to 28% at year-
end 1994. For this purpose, total capitalization is defined as
total interest-bearing debt, plus accrued long-term retirement
benefits, other long-term liabilities and stockholders' equity,
excluding the guaranteed ESOP obligation.
The company maintains substantial bank borrowing facilities to
supplement internal cash generation. At September 30, 1995, the
company had $100.0 million of borrowing capacity available under
its revolving credit agreement. In addition, the company had
approximately $150.0 million in uncommitted short-term bank
credit lines, of which $26.5 million was in use at September 30,
1995. During 1995 and 1994, the company maintained long-term debt
of $70.0 million, comprised in part of borrowings under its
short-term bank credit lines backed by its long-term revolving
credit agreement. The company has found this to be a cost
effective approach to long-term financing and intends to continue
this approach. The company believes these credit facilities
coupled with cash generated from operations are adequate for its
anticipated future requirements.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Barnes Group Inc.
(Registrant)
Date November 14, 1995 By /s/ John E. Besser
----------------- --------------------------------------
John E. Besser
Senior Vice President-Finance and Law
Date November 14, 1995 By /s/ Francis C. Boyle, Jr.
----------------- --------------------------------------
Francis C. Boyle, Jr.
Assistant Controller
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. at September 30, 1995 and the
related consolidated statement of income for the nine months ended September
30, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 16,665
<SECURITIES> 0
<RECEIVABLES> 97,698
<ALLOWANCES> 3,127
<INVENTORY> 55,174
<CURRENT-ASSETS> 181,338
<PP&E> 293,106
<DEPRECIATION> 172,327
<TOTAL-ASSETS> 364,012
<CURRENT-LIABILITIES> 78,350
<BONDS> 78,095
<COMMON> 15,737
0
0
<OTHER-SE> 113,124
<TOTAL-LIABILITY-AND-EQUITY> 364,012
<SALES> 451,290
<TOTAL-REVENUES> 451,290
<CGS> 288,974
<TOTAL-COSTS> 288,974
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 665
<INTEREST-EXPENSE> 4,259
<INCOME-PRETAX> 36,219
<INCOME-TAX> 14,270
<INCOME-CONTINUING> 21,949
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,949
<EPS-PRIMARY> 3.36
<EPS-DILUTED> 3.36
</TABLE>
